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The Week That Was – 13 August 2021

13 August 2021. Published by Ben Goodier, Partner and Sarah O'Callaghan, Senior Associate

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Contractor still liable to pay liquidated damages after partial completion

In the recent case of Eco World v Dobler, O'Farrell J the Technology and Construction Court (TCC) held that a liquidated damages clause was not void or unenforceable as a penalty because the contract permitted partial take over by the Employer without a mechanism for reducing the level of liquidated damages payable.  The Employer had challenged the clause in order to claim for general damages.

Applying the test in Makdessi [2015] UKSC 67, the Court said that: it should be slow to interfere with the commercial bargain agreed between the parties; the Employer had a legitimate interest in enforcing the obligation to complete as late completion of any part was likely to disrupt the project as a whole; by fixing in advance the liquidated damages payable the parties intended to avoid the difficulty of calculating and proving such loss; and neither party had suggested that the level of such damages was unreasonable or disproportionate to the Employer's anticipated losses.

For the judgment, see here.

Predicted 10% rise in price of materials

As the construction sector continues to boom, surveyors are braced for a 10% rise in the cost of building over the next twelve months.

Over 38% of the respondents to the RICS Construction and Infrastructure Survey for Q2 reported rising workloads, with infrastructure and the private residential building leading the growth in the sector.  Whilst the outlook is overall positive, the vast majority (82%) of respondents to the survey also reported a shortage of shortage of labour, skilled workers and building materials, which may curb the current boom. 

To read the full article, please click here.

Construction 'supercycle' predicted on wave of government spending

Industry bosses are predicting a long-term, worldwide construction 'supercycle' as developed nations increase spending on modernising infrastructure.  Brussels has begun approving national plans to distribute its €800bn EU recovery fund, whilst the UK has set aside £600bn over the next five years for infrastructure and the US is proposing a $1tn infrastructure package.

Prices for building materials have already jumped as economies around the world reopen and lift travel and lockdown restrictions.  Travis Perkins, the UK's largest builders' merchant, increased prices of bagged cement by 15 percent in May and warned that inflationary pressures would persist.  Holcim, one of the world's largest cement producers, has posted record first-half earnings and has seen shortfalls in materials and sold out product lines.  CEOs and commentators have said that the supercycle will be substantial, although slower than, and unlikely to match, that of the 2000s, which was driven by unprecedented growth for China.

For more, see here and here.

One month to rescue A38 Project

Highways England has been given until the end of August to submit new environmental information in relation to the proposed upgrade of the A38 two weeks after the High Court quashed approval of the project.  

If approved, the project would implement improvements to three junctions on the A38 near Derby.  However, the project faces objection by the Stop the A38 Expansion group.  Finding in favour of the latter group, the High Court decided that the transport secretary, Grant Shapps, had not correctly assessed the full extent of the project's carbon impact in supporting the project and overturned approval of the project.  Now, in another attempt to obtain approval for the project, Shapps has asked the project's stakeholders to assess whether the increase in carbon emissions resulting from the development is so significant that it would have a material impact on the ability of the government to meet its carbon-reduction targets. 

Highways England have said that the upgrade would improve the reliability of journey times between Birmingham, Derby and the M1.  The project also brings the prospect of jobs and further regional development around Derby.  Highways England argues that, in light of the national need for, and considerable public benefits of, the proposed development, the benefits of the improvements outweigh all of its potential adverse effects.
Highways England plan to start work on the project at the end of 2022, if planning permission is re-awarded next summer.

To read the full article, please click here.

Fire at Lendlease Construction Site

On 6 August 2021 there was a fire in the pavilion terrace that Lendlease is building on Deacon Street, Elephant & Castle, South London.  The pavilion terrace is part of a major regeneration project that Lendlease is undertaking in the local area.

The extent (and cause) of the fire damage is unclear at the time of writing, but, unfortunately, one member of the construction team sustained injuries on site and was taken to hospital.

To read further, please click here.

Willmott Dixon Awarded Energy Efficient Centre Contract

Spelthorne Borough Council has engaged Willmott Dixon to design and build a leisure centre that aims to be the first to achieve the Passivhaus standard in the Greater London region.  Read more about the features of the proposed leisure centre here.

Passivhaus is a concept of design and build developed by the Passivhaus Institute in Germany: "A Passivhaus is a building in which thermal comfort can be achieved solely by post-heating or post-cooling the fresh air flow required for a good indoor air quality, without the need for additional recirculation ofair."  Read more about the concept of Passivhaus here.

Thank you to Alastair Stewart, Zack Gould-Wilson and Sharona Zovich for contributing to this week's edition.

If you have any queries or comments, please contact:

Ben Goodier
+44 20 3060 6911
Sarah O'Callaghan
+44 20 3060 6852